Let’s let employers get out of the medical care business
By Jack E. Lohman
Milwaukee Journal Sentinel online
Posted: July 3, 2005
After spending 35 years in the health care industry, I never thought I’d be supporting more government involvement in medicine. But, clearly, our private system is broken.
Double-digit increases in health care costs are driving manufacturing jobs out of the country. That will continue if the system is not fixed.
Today, more Big Three autos are being made in Ontario than in Detroit. General Motors’ planned cuts of 25,000 jobs expose a trend that has been in progress for years:
GM spends $6,500 per year per employee in the United States for health care. But as it builds more of its cars in Canada, its costs will decrease to an $800 per employee per year tax to help cover that country’s single-payer system.
The sticker price on every GM vehicle includes $1,500 for health care, compared with $186 for Toyota.
What else can we reasonably expect but exodus?
It is by historical accident that employers provide medical coverage, and 40% of business leaders now want out of it. Canada’s single-payer system makes the most sense, although we can eliminate their wait times.
Even with its legendary wait times – which are short to non-existent when urgent procedures are required – Canada’s life expectancy is two years longer than ours, its infant mortality 35% lower, and all with 40% less in costs.
Turning health care administration over to one payer, as Medicare did, would keep the independence of physicians and hospitals and still allow patients full physician selection. It’s just a different way of paying the bill.
It would reduce administrative costs from a typical 30% to Canada’s 8%. Medicare’s is less than 4%. Using Medicare’s rules and fee schedule would ensure fair reimbursement, although increasing its rates slightly would make it fairer and still be less costly than what we have today.
Excessive and unnecessary testing easily adds 25% to our exorbitant health care costs, and that misuse must be curtailed.
One for-profit HMO pays its CEO $7.2 million annually, and he holds $720 million in company stock. That is patient money that is not being used for patient care. Independent physicians and hospitals are not totally free of extravagances, which also drives costs up.
Who would pay for a single-payer system? The same people who are paying for it today: Taxpayers.
We all pay for the present health care system, which costs some $1.6 trillion each year. And 100% of this money comes from we the people, through taxes, premiums, co-pays, deductibles, purchases, employer tax breaks and the other methods we use for collecting money.
When we buy a product, that company adds its health care costs to the price, and we pay at the cash register. What we are really talking about changing is how we collect and use the same money.
At the federal level, the health care, insurance and pharmaceutical industries are doing everything in their power to block progress toward an efficient system. While getting rid of our moneyed political system would fix this and many other societal problems, that isn’t going to happen soon. Politicians like the flow of campaign cash just as it is.
In the meantime, the states can act to keep jobs at home.
We can establish our own single-payer system by contracting with the same company that administers the Medicare system. With the savings, we could replace BadgerCare and Medicaid and cover all Wisconsin families.
It all makes sense for the public, but that may be its downfall.
Jack E. Lohman of Colgate is a former CEO of an independent diagnostic testing facility in Milwaukee and is executive director of www.WiCleanElections.org .
